The parallel importation of prescription drugs into the UK is a huge business. Drugs supplied by parallel importers are preferred by many UK pharmacists because of their price. NHS prescriptions are often written generically and this leaves the market wide open for patients to receive parallel imported products.
In a recent parallel import and re-branding case before the English High Court and involving the anti-diuretic drug trospium chloride, Speciality European Pharma (SEP), the claimant, tried to stop Doncaster Pharmaceuticals Group (Doncaster), a parallel importer of pharmaceuticals, from rebranding its products and selling them in the UK (Speciality European Pharma Ltd v Doncaster Pharmaceuticals Group Ltd and Madaus GmbH  EWHC 3264 (Ch)).
SEP specializes in the distribution and sale of pharmaceutical products, particularly in the fields of urology and urogynaecology. Madaus GmbH (Madaus) manufactures trospium chloride and held the patent until 2009 when it expired. Madaus markets and distributes trospium chloride products in Europe. The product is marketed in France under the brand name Céris, in Germany as uriVesc and in the UK as Regurin. SEP were Madaus’ exclusive licensee in the UK and took over distribution of the 20mg version of the anti-diuretic from the previous distributor Galen. Subsequently, SEP launched a 60mg product in September 2009.
Doncaster is a parallel importer of pharmaceuticals and imported Céris from France for many years, overstickering the brand name (Céris) with the generic name trospium chloride. In late 2009, once Madaus’ patent had expired, Doncaster started to affix the UK trade markRegurin, rather than the generic name, to the imported Céris packs. In 2011 Doncaster started to import uriVesc from Germany into the UK and also rebranded it as Regurin.
At this point SEP decided to launch trade mark infringement proceedings against Doncaster and joined Madaus as a 2nd defendant although no relief was sought against them.
The issue here was whether it was objectively necessary for Doncaster to rebrand the French and German products as Regurin in order to gain effective market access to the United Kingdom. Of course, in their view the answer was yes, and they came up with a number of arguments in favour of rebranding. These included the argument that Regurin products filled about 40% of UK prescriptions written for trospium chloride and that therefore in order to gain effective access to that market they (Doncaster) were entitled to use the brand name Regurin. They also argued that, in order to gain access to the wider generic market, they should also be free to use Regurin which could then satisfy prescriptions written generically.
There are two forms of the product; tablets which contain 20mg of trospium chloride and delayed release capsules which contain 60mg. Doncaster also argued that, in order to market the 60mg version, the product needed to be rebranded Regurin given the refusal of the MHRA to grant the parallel import licence to Landmark Pharma Ltd (a related company to Doncaster) on the basis that it can only be dispensed in the UK under a brand name.
Asplin J considered the relevant law, namely the Treaty on the Functioning of the European Union (TFEU), which established the EU and determines how it operates and which provides at Article 34 that “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between member states.”
Article 36 contains the following proviso to that prohibition, namely that “Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.”
Article 5 of the European Trade Marks Directive provides that the proprietor of a trade mark has exclusive rights which may be infringed by the use of that trade mark without his consent. These exclusive rights are subject to limitations set out in Article 7 of the Directive as follows:
“1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.”
Asplin J held that the court didn’t need to decide whether, for the purposes of rebranding, the test of necessity was to be applied to the market as a whole or to a substantial part of the market. The question was whether it was objectively necessary to replace the original trade mark with the trade mark Regurin in order to gain effective access to the trospium chloride market in the United Kingdom. On the evidence, there was no need to replace the other marks with the Regurin mark. This was so whether one took into account the market for trospium chloride as a whole or whether one examined the markets for the 20mg and 60mg products separately.
Given the percentage of the market open to Doncaster, namely the prescriptions for trospium chloride that were written generically and without reference to Regurin (90% of prescriptions written for the 20mg version and 68% for the 60mg version) the exclusive use of the mark Regurin by SEP did not contribute to the artificial partitioning of the markets between member states.
Doncaster was merely seeking a commercial advantage by way of a greater margin on their imports. They were seeking to piggyback on SEPs investment and marketing strategy in order to take commercial advantage of being able to sell their parallel imports at a higher price than generic versions of the anti-diuretic drug. The “objectively necessary” argument put forward by Doncaster was undermined by the existence of other brands of trospium chloride on the market in the 20mg field.
There was no evidence Doncaster could not compete effectively against the generic producers. Nor was there evidence of the existence of any rules or structures, within the UK market, which hindered Doncaster from gaining effective access to the market if it were not permitted to use the Regurin mark. In fact, National Health Service policy in the UK pointed to the opposite conclusion, being in favour of generically written prescriptions.
There was no significant resistance on the part of consumers or pharmacists to an over-stickered product.
It was held that the Regurintrade mark had been infringed as a result of the use made by Doncaster in circumstances where there was no objective necessity for rebranding.
Why is this case important for brand owners and exclusive licensees? If the judgment had gone in favour of Doncaster this would have led to parallel importers taking advantage of brand owners and exclusive licensee’s marketing efforts once the patent on a product has expired.
Here in the UK, the NHS tends to favour generic pharmaceuticals rather than branded ones and the resistance to over-stickered pharmaceuticals is fairly low. Therefore, here at least, parallel importers will struggle to convince the courts that it is objectively necessary to adopt the UK brand name in order to access the market.